Applied Materials vs. Rest of the World

Dr. Robert N. Castellano, The Information Network

NEW TRIPOLI, USA: The semiconductor equipment industry didn’t do too well last year, and compared to the semiconductor industry, it hasn’t done too well since 2000. In the chart below, the semiconductor industry, represented by the line, has diverged from the equipment industry since the downturn of 2001. The solid trendlines are telling.Depending on who you talk to, the semiconductor equipment industry dropped between 40 percent and 50 percent in 2009. The top 10 semiconductor equipment companies are listed in the table below along with their change in revenues between 2008 and 2009.

Source: The Information Network

The revenues are shown in US Dollars and the change in revenues is somewhat deceiving since currency exchange rates are a factor.

It’s no secret in the semiconductor equipment industry that Applied Materials and Novellus don’t have a warm fuzzy feeling about each other. Back in 2004 a patent infringement lawsuit was settled that ended seven years of litigation between the two companies. Problems actually started in 1984 when Novellus was founded by ex-Applied Materials employees.

In reality, Applied and Novellus only compete against each other in a handful of sectors. Overall, from the chart below, Novellus’ revenues dropped 37.4 percent while Applied’s dropped 38 percent. Essentially, the difference is in the noise level when you factor in, or more precisely take out, revenue components such as service and spare parts.

What about individual sectors? We give the edge in the largest sector, PVD (physical vapor deposition), to Novellus, but only marginally as revenue decreased 37 percent versus 41 percent for Applied.

Source: The Information Network

Comparing the two companies, Novellus increased market share in 2009 in 4 of the6 categories.